Homework 2 (Due 11/2)
Continuing our work on labor markets, I want us to explore the labor market outcomes for low educated men in this homework assignment. As we discussed in class, there have been large shifts in where low educated men have worked over the last 30 years (including movements into the home sector). I want us to explore in this homework what has happened to the relative wages of low educated men across the various occupations in which they work.
To do this, we will use the CPS data available on the IPUMS website. The data can be found at the following:
Let’s restrict our sample to individuals between the ages of 20 and 45. Lets define low educated as those with a high school degree (or GED) or a high school dropout. High educated will be all others.
Lets focus on four occupation groups: all occupations, and then the sub groups of manufacturing, construction, and all other. The latter three is universe of the all occupation category.
Code to convert the CPS IPUMS data into broad occupation classification can be found on the course web page (in stata).
What I want you to do:
1. Compute the log real hourly wage of low educated men employed in each of the four occupational categories is every year between 1977 and 2010. You can deflate the wages using the CPI. Plot these trends on one figure. Lets normalize the 1977 log wage to 1 for each occupation. You can then just plot the log deviation from the 1977 wage in subsequent years. This will give us a rough measure of the percentage change in real wages for each occupation over time relative to the 1977 wage.
2. Do the same thing for low educated women.
3. Do the same thing for high educated men.
4. Do the same high for high educated women.
5. On a final figure, just plot the average wage (in the sample that includes all occupations) for each of the four groups. This plot will document the evolution of the skill premium (wage for high educated vs. low educated) over this time period for both men and women.
As with the first homework assignment, write up each section separately telling us what you did and what you found. Include the relevant figure for each part. Again, feel free to experiment with other data cuts if you are so inclined.
With this assignment, I want to see if we can start to understand why low educated men have been exiting the labor force with an increased frequency during this time period. In particular, how has the decline in manufacturing affected the labor supply of low educated men? Did the construction boom in the 2000s delay the inevitable for low educated men?